International purchasing and environmental sustainability - Can they co exist ?

After the Copenhagen climate change conference there has been an increasing interest in purchasing, logistics and supply chain professionals about how they can contribute towards making the world a better place. This is evident in the increase in the number of articles from supply chain magazines on environmental sustainability. Some people perceive international purchasing bestowed with poor environmental sustainability. However I choose to argue the opposite with the following reasons.

Multinationals have raised the need for addressing sustainability globally - With the increasing number of multinationals in developing countries, there is an increasing need to ensure that their suppliers are environmentally sustainable to be as suppliers to them. Hence multinationals have served as a major driver in creating awareness and systems for environmental sustainability. We know from the climate change that sustainability needs to be addressed as a global phenomenon and not as a local/regional phenomenon.

Intermodal transport is a great need - Russia has recently inaugurated a gas pipeline of more than 2250 km from Russia in to East Asia. This event will invoke discussion about the trans-siberian railway network which is supposed to connect China and Europe. With this network inline it would perhaps be less carbon intensive to transport goods from China in to Northern Europe when compared to truck transportation from southern Europe. Hence with such infrastructural and governmental level involvement it is possible to make international purchasing co exist.

Planning for sustainability - Products that are based on platform design, where there is a large amount of standardization and modularization involved could result in better predictability of demand, reduce variation, reduce obsolescence risk and also increase the scale of sourcing volumes. This could be coupled with postponement of manufacturing to nearby customer locations. Such logistics strategies increase environmental sustainability but still make it viable for international purchasing.

Cross functional integration - International supply locations act as good sources of sustainable designs and hence act as good reason to source from them. In order to adopt these good practices from international locations there is a need for good cross functional integration in the company. This aids better understanding of internal requirement and also external opportunities/ideas.

Product characteristics affecting sustainablility

Much has been written and researched about the need for infusing sustainability in procurement , logistics and supply chain process. There is a common understanding and agreement about the increasing importance of sustainability for companies. However challenges like economic viability of being sustainable and availability of hands on tools for creating sustainability in organisational and functional processes remain.

This is an attempt to create tool for purchasing managers to identify sustainability based on the product characteristics. It includes characteristics like obsolocene risk and demand volatility which increases supply chain wastage, ease of disassembly/salvage, value density, packagability and product nature in terms of hazardous nature of product. The picture does not consider social and economic aspects of sustainability which needs to be infused in further development.

Sustainability & Innovations

When most of the developed countries are struggling for innovation

s to improve sustainability in operations, the developing countries - Fun pix

Calculate the carbon emission/person in this picture and compare it to the western world

Talking about reuse and Innovations for reuse

Value density of transportation

Environmentally friendly cars with zero emission

Environmental concerns in developing countries

The debates about how the developing economies of China and India are contributing to the increasing environmental concerns is never ending. However in this blog the intention is to put forward a few aspects in favor of the developing countries which I have seen as much more not evident.

@ the cost of economic development - India and China are possibly the two largest economies with a large capacity in recent times to purchase more automotive, expand their industries and "catch up" with missed boat of industrial revolution and economic development (Which the western economies have taken successfully taken - resulting in existing environmental concerns). Though the western world is fighting the issues of environmental sustainability, developing countries are fighting other priorities (Reducing hunger & poverty, wealth redistribution through employment creation). With increased pressure on just setting measures for developing countries to reduce environmental impacts western countries and international bodies should think about how to reduce environmental impacts without sacrificing economic growth. So the question for developing countries is not How to reduce environmental impact? but how to reduce environmental impact without sacrificing economic growth?

Screwed measures - One of the measure used on a global scale to measure environmental impact is the amount of carbon produced by each country. Even though China and USA comes at the top, there seems to be something fishy with the measure. Instead of the C02 emissions per country what would be an appropriate measure is the CO2 emissions per capita (meaning CO2 emitted per person in each country) in which developed countries would be having a higher environmental impact than developing countries.

Produced locally and consumed locally - In all the developed countries food comes from around the world for catering to the need for variety to customers. Its not uncommon to see in retail stores of Europe the Kiwi fruits from New Zealand, Meat from Australia, Grapes and other tropical from Peru/South America. The food miles travelled by these products are far higher than the food miles in developing countries. In developing countries food and grain are locally produced and consumed ( Thanks to the poor logistics infrastructure, lack of cold storage facilities and inability to industrialize food production), making them much more environmentally friendly.

Innovation is the key - concerns exists about waste water disposal, lack of clean water in the future, transportation infrastructure, product usage & disposal. When developing countries are in the process of improving or installing new infrastructure (transportation, building, waste disposal) developing countries have a better scope to be much more environmentally friendly than in developed countries (Given they understand and accept the importance of environmental friendliness).

It is everyones problem - Developing countries are increasingly made as the factories of the world. There will be little debate for the claim that "China is the factory of the world", "India as the IT hub of the world". While these global clusters are being formulated, developed countries naturally take the roles of supply chain orchestration, product & services development, technology development and customer satisfaction. Even though there are arguments that developing countries are substantially affecting environment, the impacts are global (like global warming). Hence the problem resolution has to be global rather than pushing the problem to specific developing countries/regions.